Skip to main content
Advertising

Originally published May 7, 2014 at 6:35 AM | Page modified May 8, 2014 at 6:59 AM

  • Share:
             
  • Comments (0)
  • Print

Sanctions meant to hurt Russia take bite in Europe

Sanctions against Russia are taking a toll in Europe as well, figures showed Wednesday, as a top U.S. official negotiated potential new economic punishment for the Kremlin's incursion into Ukraine.


Associated Press

Reader Comments
Hide / Show comments
Yes well .... is anyone really surprised by this? MORE

advertising

PARIS —

Sanctions against Russia are taking a toll in Europe as well, figures showed Wednesday, as a top U.S. official negotiated potential new economic punishment for the Kremlin's incursion into Ukraine.

Treasury Undersecretary David Cohen, in Paris as part of the Obama administration's push to bolster European support for broader sanctions, acknowledged that the measures are also inflicting pain on companies in the United States and especially Europe, whose banks and energy firms have deep Russian interests.

"This is not cost-free for anybody, including the United States. We don't deny the reality that there's more exposure overall in Europe," Cohen told reporters.

But, he said, the stakes were high after Russia's takeover of the Crimean Peninsula and the weeks of unrest in eastern Ukraine that have followed. Cohen would not specify what could trigger new sanctions, but said a recent executive order would allow the U.S. to target Russian companies in specific economic sectors.

He also said the U.S. and Europe were committed to ensuring that Ukraine's May 25 presidential elections take place without interference.

"We are looking to design the sanctions in a way that maximizes the impact of those we're trying to affect while minimizing the collateral impact," Cohen said.

Russia's economic slowdown predates the sanctions but appears to have accelerated. Investors pulled about $60 billion out of the country in the first quarter of the year -- more than in all of 2013 -- and the economy is contracting. The ruble has fallen to record lows, cutting the value of revenues and investments made by foreign companies.

The effect is rippling through some of Europe's largest companies.

French bank Societe Generale said Wednesday that the declining ruble and economic uncertainty forced the write-down of 525 million euros ($731 million) on its Russian activities, which include a 92.4 percent stake in Rosbank.

BP, which has a 20 percent stake in Russia's largest oil producer, Rosneft, is facing even more complications. Rosneft's CEO is targeted by U.S. sanctions, and BP last week said its earnings from the Rosneft stake fell sharply in the first quarter because of the sliding ruble.

And in Germany, factory orders plunged unexpectedly in March as the government warned that the crisis over Ukraine could add to underlying weakness among companies showing "temporary restraint in ordering activity due to current geopolitical events."

In a sign that even smaller-scale companies are suffering, Danish brewer Carlsberg said uncertainty in its Russian market led to $12.5 million in first-quarter losses, with the assumption that sales there would continue to contract.

Cohen said Russia's economic integration had costs and benefits, although he denied that European governments had been reluctant to impose more sanctions.

"The Russian people have seen the potential for engagement with the rest of the world," he said. But "it also adds complications in how we design our sanctions programs."

The U.S. has pressured senior American executives to skip an international economic forum in St. Petersburg, and Cohen said European governments share the view that attending "sends the wrong signal."

___

Follow Lori Hinnant at: https://twitter.com/lhinnant

___

Associated Press writers David Rising in Berlin and Jan Olsen in Copenhagen, Denmark contributed.



Want unlimited access to seattletimes.com? Subscribe now!

News where, when and how you want it

Email Icon

Where in the world are Seahawks fans?

Where in the world are Seahawks fans?

Put your marker on The Seattle Times interactive map and share your fan story.

Advertising

Advertising

The Seattle Times photographs

Seattle space needle and mountains

Purchase The Seattle Times images


Advertising
The Seattle Times

The door is closed, but it's not locked.

Take a minute to subscribe and continue to enjoy The Seattle Times for as little as 99 cents a week.

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Subscriber login ►
The Seattle Times

To keep reading, you need a subscription upgrade.

We hope you have enjoyed your complimentary access. For unlimited seattletimes.com access, please upgrade your digital subscription.

Call customer service at 1.800.542.0820 for assistance with your upgrade or questions about your subscriber status.

The Seattle Times

To keep reading, you need a subscription.

We hope you have enjoyed your complimentary access. Subscribe now for unlimited access!

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Activate Subscriber Account ►